A single letter to the editor in a small Texas town has made it around the country in just a few weeks. Ed Barnett, a typical taxpayer, penned this justified rant to his hometown Wichita Times Record News (I am assuming their archrival is the Wichita Daily Weekly Recorder Courier Journal Democrat-Republican): Dear IRS, I am sorry to inform you that I will not be able to pay taxes owed April 15, but all is not lost. I have paid these taxes: accounts receivable tax, building permit tax, CDL tax, cigarette tax, corporate income tax, dog licence tax, federal income tax, unemployment tax, gasoline tax, hunting licence tax, fishing licence tax, waterfowl stamp tax, inheritance tax, inventory tax, liquor tax, luxury tax, medicare tax, city, school and county property tax (up 33 percent last 4 years), real estate tax, social security tax, road usage tax, toll road tax, state and city sales tax, recreational vehicle tax, state franchise tax, state unemployment tax, telephone federal excise tax, telephone federal state and local surcharge tax, telephone minimum usage surcharge tax, telephone state and local tax, utility tax, vehicle licence registration tax, capitol gains tax, lease severance tax, oil and gas assessment tax, Colorado property tax, ...

Today the IRS stopped using private tax collectors. That's right: they won't let a single tax mercenary collect overdue taxes. This sounds great -- less money spent on expensive government contractors, and less of our private information being leaked out of the government. But is it really the right decision? The basic argument against private tax collectors is that we're paying them to go after money people already owe the government. If they're not afraid of the Feds, the argument goes, why would they fear some random company? If the companies don't have any way to convince people rationally, it's a fair assumption that they're just using dirtier tactics than the IRS, and making 25% of what they collect in the process! But what if there's a better way to do the collecting? Keep in mind that this is money the IRS usually doesn't expect to see again -- people know they owe it, and they just won't pay. So, instead of pressuring them into giving the full amount, why not let these private companies negotiate a discount? Here's how it would work. Instead of a contract, there would be an auction: the IRS would sell ...

Reid Hoffman (CEO of LinkedIn, and self-proclaimed 'free-market socialist') says we should let startups bail us out. As an investor in more than sixty startups, he ought to know how effective they can be. His plan comes in three stages: He wants a program that will provide small loans (up to $50,000) for startups. He wants to change the current skilled-worker visa system, so that instead of a quota (65,000 H-1B immigrants per year), there's an unlimited number of immigrants and a 10% payroll tax on each, to be reinvested in job training for Americans. He wants the government to match investments for venture capitalists and angel investors (giving them 50% of the profits from any investment). There are a few problems with this plan. The first one is that, since he suggested it, Reid Hoffman has more or less permanently torpedoed any chance that this will take off. The plan gives him $3 million in cheap loans, a larger labor pool, and millions more in matching funds -- all at a time when those of us who aren't CEOs of billion-dollar startups are hurting for jobs and loans. Not only that, but the hedge ...

The Dow is back down to where it was last time we had a charismatic Democratic president making big, budget-busting promises. And this time, there's not an intern in sight to spoil the party. We all know we're in for a giant spending spree: billions for solar-powered underwater basket-weaving communes, all paid for by taxes on people who, y'know, make stuff and do stuff. But is it that big a disaster? Obama spent ten years teaching at the University of Chicago, a center of modern conservative thought. Did a decade of rubbing shoulders with Milton Friedman's disciples rub off on him at all? The answer is yes. In his budget speech last week, he announced several new programs that are near and dear to conservatives. Here's why you should be excited about Obama's new budget: Did you like Ike? Obama's infrastructure plan is finishing what Eisenhower started. Fifty years after Eisenehower spearheaded the new interstate highway systems, we're finally going to stop scrimping on maintainence. Ike wouldn't want to see bridges falling; neither should you. Know what he means when he says 'reform'. The people who voted for Obama didn't vote for spending cuts. But that's just what Obama promised when he talked about ...

Congratulations: you, the taxpayer, now own even more of what used to be America's biggest bank. That's right: the government is once again raising its stake in Citigroup by switching from preferred stock (which pays a high dividend, and is basically like a bond) to common stock (which is closer to just owning part of the business). So, in theory, We The People own 36% of Citibank. And this is considered very big news. But is it? Consider how much the government is already involved in Citi: Most of Citibank's deposits are guaranteed by the FDIC. Which means that when you deposit money at Citibank, you're really lending it to the government, which is lending the money back to Citibank. Citi is mostly doing the paperwork. Citi makes loans with those deposits. Who do they loan to? Mortgages and government bonds make up a huge chunk of the portfolios of many banks, and, once again, those are loans to the government. Government regulations control how much they can borrow, how much they can lend, what they can lend to, where they can lend, what kinds of loans they can resell, and who they can deal with. The government has veto power over everything Citibank does. Citi ...

A proposed gas tax led to some red faces at the White House earlier this week. Ray LaHood -- the only Republican in the Obama administration -- suggested it, perhaps in an effort to put the 'tax' back in 'tax-and-spend'. To the average driver, paying for something you used to get for free sounds like a bad deal. Five reasons it's actually a great bargain instead: 1) The 'fringe benefits' are fantastic: part of the mileage-tax plan requires installing a global network of GPS-based car-tracking systems. There are privacy concerns, of course, and those will need to be addressed. But this plan also makes it possible to do some amazing things. From dynamic traffic maps criminal detection, this would allow the government to start many other programs. And if private companies could use the information (again, privacy is a major roadblock), they'd be able to come up with even more great uses. 2) Smug hybrid owners will have to pay their fair share: I know, I know, playing politics means playing dirty. But surely we can all agree that if gas taxes pay to fix up roads, Prius owners are getting away with highway robbery. 3) Gas-guzzling SUV drivers will still pay up, too: ...

Via TaxProf, I found this article suggesting that we audit all high-ranking politicians political figures. Not to be vindictive -- or not just, anyway -- but because people take cues from politicians on how to behave, and incidents like the Daschle tax affair make people less likely to take taxes seriously. This doesn't just have the obvious effect of streamlining the nomination process by digging dirt in advance. And it's also not just a way to keep politicians honest about the favors they're getting from -- and doing for -- their friends. Nope, it's actually based on a legitimate study, which showed that people cheat less on their taxes when they think others cheat less, too. The great thing about a proposal like this is that it would be so hard for anyone to honestly object. The version suggested in the link actually requires that we not release the results to the public. Instead, people would just be informed if their representatives ahd over- or under-paid. Granted, this is a one-shot deal. If regular audits became more common, a few crooks would shape up, and the rest would just try to be a little more subtle. But in the meantime, it would create the ...

As tax season rolls around for most of us, some folks are nervously remembering April 15ths past, when that tax due date crept up and sprinted past. Fortunately, the IRS is not exactly averse to getting their money, even if it comes a little late. And you don't even have to go through their standard-issue rigamarole, either: over the last few years, plenty of online tax providers have appeared on the scene to help make filing late taxes easy! Here are a few of the top players: TurboTax -- Best known for their plain-vanilla tax software, TurboTax is willing to accomodate taxpayers who missed their deadlines. If you already use TurboTax, it can be a solid choice -- but their late-tax features tend to be bolted on after the fact. TurboTax is tax-paying software that happens to allow late filing, not anything specifically good at that particular issue. PriorTax -- Definitely best of the bunch. PriorTax is a service specifically designed for people who need to pay their taxes late, so every time you use the site, you're using it exactly the way the designers intended. In addition to a great array of tax-filing services, the site has a full glossary and a ...

In the wake of the Madoff scandal, some people have discussed how "fraudulent conveyance" could be a major issue. The doctrine of fraudulent conveyance basically holds that after a fraud, someone who benefited should give up some (or all) of their benefits to those who were wronged, even if they had no idea what was going on. It's a usful doctrine in a lot of cases -- if Madoff, for example, had given his sons tens of millions of dollars but left others high and dry, it wouldn't be a great plan to let them keep the money. But what people don't often mention is the big problem with fraudulent conveyance: it encourages people to look the other way when they suspect that they've accidentally invested in a Ponzi scheme. Imagine a Madoff investor who realizes that Bernie has been lying, and is billions of dollars short of what he said he'd earned. The investor has two basic 'exit strategies': to hope that Madoff makes back the money he said he had, or to pull out money now. But pulling out money makes it harder for Madoff to make it back! If Bernie has $5 billion, and says he has $10 billion, ...

Caroline Kennedy recently withdrew her name from the running for New York's open Senate seat, in a manner that was peculiar, to say the least: There was incredulity in Democratic circles Thursday afternoon after the governor?s camp engaged in a ferocious public back-and-forth with Ms. Kennedy?s side, reaching out to numerous news organizations early Thursday afternoon to disparage her qualifications; one person close to the governor said that her candidacy had been derailed by problems involving taxes and a household employee, but declined to provide details. Taxes and a household employee? The New York Times has more: Ms. Kennedy?s only tax issue on the public record appeared to be a $615 city tax lien that she settled in 1994, a minuscule amount for a multimillionaire. It doesn't take much of a conspiracy theorist to wonder if the tax issue is not really much of an issue; surely if a Geither-sized mistake doesn't cost anyone his job, a $615 lien shouldn't, either. Perhaps she suffered more for her awkward interviews, her flimsy resume, or the fact that Presidential approval polls don't show very much support for political dynasties at the moment. The nice thing about a tax problem is that nearly ...